The equity markets on Monday resumed their downward journey with the benchmark Sensex declining 372 points, or 1 per cent, to end at 37,091, while the Nifty50 index declined 131 points, or 1.2 per cent, to close at 11,148. Both indices logged their ninth consecutive session of decline and ended at two-month lows.

Since April 26, when the losing run started, the Sensex has declined nearly 2,000 points, or 5.1 per cent. On the other hand, the Nifty has shed over 600 points, or 5.2 per cent, in the past nine sessions — its longest losing streak since May 2011.

India’s market cap loss during this period has been Rs 8.53 trillion, with the country’s rank slipping one notch on the world’s most valuable markets list.

The latest correction in the market has been triggered by the flare-up in US-China trade tensions. However, domestic economic woes and election uncertainty have exacerbated the fall, said experts.

“The market fall is on account of a mix of global and domestic factors,” said Ravi Muthukrishnan, head of institutional research at Elara Securities. “The pharma sector is in trouble, fast-moving consumer goods is hit by rural growth problems, the automobile sector is in definite trouble, the banking sector is slightly better, but we have to wait and see.”

Experts said investors were worried about economic data such as the factory output decline, weakness in high-frequency indicators such as auto sales, and credit crunch in non-banking financial companies (NBFCs).

“Consumption growth has slowed recently, especially on the back of NBFC-related liquidity crunch and farm sector concerns. Private sector investment is unlikely to see a sharp recovery, given the still weak balance sheets and limited scope for the private sector to invest in the basic infrastructure sectors. We thus, see limited impetus to economic growth and expect gross domestic product growth to weaken to 6.8 per cent in 2019-20, from 6.9 per cent in 2018-19,” said a note by Kotak Institutional Equities.

Dwindling foreign portfolio investment (FPIs) and slowdown in inflows at domestic mutual funds have weighed on stock prices. On Monday, FPIs pulled out Rs 1,056 crore from domestic stocks — their third straight day of net-selling.

Experts said the markets could see more downside in the run-up to the election results next week.

“Investors are waiting in the wings to see the election outcome. The Nifty slipping below 11,000-levels is a possibility. If the Bharatiya Janata Party (BJP) doesn’t come back to power, the correction could deepen,” said Muthukrishnan. Even after the latest correction, the valuations are still expensive, providing little incentive to investors to buy the fall.

Motilal Oswal, chairman and managing director, Motilal Oswal Financial Services, said: “Global headlines are negative. Also, domestically some economic indicators haven’t been encouraging. There is a view that the BJP may not get a majority. All this is weighing on sentiment. The markets will remain volatile in the run-up to the election results.”

“Despite several headwinds such as fledging growth momentum, rating downgrades for some of the large companies, and the looming fear of defaults by certain corporate houses, the headline valuation for the benchmark index continued to remain high in India,” said Jitendra Gohil, head of research, Credit Suisse Wealth India.

Currently, the benchmark Nifty trades at 18 times its one-year forward earnings estimates, higher than its 10-year average of 15.5 times. “Unless earnings catch up, this valuation is not sustainable,” Gohil adds.

So far the earnings season has been a mixed bag with 17 of the 27 Nifty companies that have reported so far have either met or exceeded estimates, the data compiled by Bloomberg shows.

“You need at least another two quarters for earnings to come back,” said Muthukrishnan.